Samsung SDI, a leading South Korean battery manufacturer, is considering establishing its inaugural standalone electric vehicle (EV) battery plant in the United States. President and CEO Choi Yoon-ho recently expressed intentions to prepare for this plant’s construction, marking a strategic shift in the company’s investment approach.
Previously recognized for its cautious investment strategy compared to other major battery manufacturers in South Korea, Samsung SDI had primarily focused on joint ventures, notably with Stellantis in North America. However, the company now appears inclined toward independent market entry with the U.S. plant construction plan. Industry analysts are closely monitoring Samsung SDI’s strategic move, interpreting it as a proactive step to secure future leadership in the EV battery market.
Concerns persist regarding potential challenges, including uncertainties in future U.S. policy towards EVs, financial burdens associated with large-scale investments, and fierce competition from Chinese battery manufacturers. These factors suggest that the industry might face an extended period of “chasm”—a temporary stagnation before market expansion.
However, South Korean battery manufacturers, including Samsung SDI, are gearing up for the production of cylinder cells in anticipation of declining interest rates and an expanding EV market. This shift towards cylinder cell production, which has attracted interest from global EV manufacturers like Tesla, underscores a departure from the historical dominance of pouch and prismatic cells. Reports indicate that cylinder cell production is likely to be a key focus at Samsung SDI’s potential U.S. plant. LG Energy Solution is also poised to commence mass production as early as August this year, while other companies are also developing various prototype cylinder cells and collaborating with automotive manufacturers.
South Korean battery manufacturers perceive their combined order backlog surpassing 1000 trillion won as their resilience against the market downturn. Kim Dong-myung, CEO of LG Energy Solution, recently stated, “To overcome challenging situations, we will not only minimize unnecessary costs and streamline workforce operations but also make swift decisions and take actions at a completely different level, aiming to enhance productivity and efficiency.”
For example, LG Energy Solution is focusing on the price competitiveness of its mid-nickel (nickel content 40-60%) battery models and plans to introduce Cell to Pack (CTP) technology to reduce costs. CTP involves reducing the proportion of parts in the packaging process, enabling more battery cells to be placed, thereby leading to significant cost savings.
Meanwhile, SK On, a latecomer to the battery business, aims to capitalize on the high-growth U.S. market through diversified battery offerings and strategic partnerships. Discussions regarding supply agreements with companies like Nissan reflect SK On’s ambition to strengthen its position in the market, evidenced by a substantial increase in its order backlog from the previous year. The order backlog from last year increased by approximately 110 trillion won compared to the previous year (2022), reaching 400 trillion won.
Samsung SDI is not only focusing on traditional battery technologies but also investing heavily in solid-state batteries, allocating a record-breaking 1.1364 trillion won for research and development. This commitment underscores the company’s long-term vision, with plans to commence mass production in 2027 and further facility expansions this year. The company has announced investments exceeding last year’s 4.3 trillion won for facility expansion this year.
However, concerns loom over potential oversupply in the market, driven by the impending full-scale operations of large-scale battery factories in North America. Additionally, uncertainties surrounding U.S. policy and competition with Chinese companies pose challenges to market stability. As the North American EV market shows promising signs of expansion, industry players must navigate these complexities while striving for sustainable growth and competitiveness.
“While the penetration rate of the EV market in North America is still only 10%, there is significant potential for market expansion,” said a battery industry insider. “Nevertheless, companies must prepare for Trump-related uncertainties and counter oversupply while competing against Chinese companies in non-Chinese markets.”
